From CNBC · Luke Fountain · · 3m
Midterms reshape defense, healthcare, crypto and AI stocks
Midterm election could shift power over defense, healthcare, crypto and AI stocks.
In brief
Midterm election could shift power over defense, healthcare, crypto and AI stocks. Democratic control of Congress may alter federal spending, oversight and regulatory rules for defense, healthcare, crypto and AI sectors. Originally reported by CNBC.
What midterms mean for stocks
The midterm election could reshape the outlook for companies heavily exposed to Washington, especially in defense, healthcare, crypto and artificial intelligence.
Democratic control and oversight
Democratic control of either chamber could bring more investigations and oversight, while giving the party leverage over federal spending and must-pass legislation.
Trump's regulatory impact
Even without control of the White House, Congress could influence billions of dollars in government funding and determine whether Trump-era regulatory changes become lasting law.
Historical market patterns
Historically, stocks have performed well under divided government. Under Republican presidents, the S&P 500 has gained an average of 23% in the year after midterms when Congress was split, compared with 16% when Democrats controlled…
Morgan Stanley analysis
Analysts often attribute the pattern in part to congressional gridlock limiting sweeping policy changes.
Morgan Stanley's view
We don't think that blueprint holds up this time around, and we still see plenty of reasons to be constructive on the U.S. equity market.
Investor perspective
For investors, the midterm election could reshape which businesses preserve their advantages in Washington, particularly in industries such as defense, healthcare, banking and artificial intelligence.
Market-moving changes
There are some policy changes that might be market moving, at least for certain segments.
Congressional oversight actions
Control of either the House or Senate would give Democrats committee gavels and subpoena power, allowing them to demand documents, compel testimony and haul executives before public hearings.
Molina Healthcare example
Molina Healthcare generated $32.2 billion, or 75% of its 2025 premium revenue, from Medicaid, according to the company's annual Securities and Exchange Commission filing.
Medicaid funding risks
Losing government contracts or failing to renew them on favorable terms could materially reduce premium revenue.
Defense spending requests
The White House has requested $1.5 trillion for national defense in fiscal 2027, with a focus on replenishing weapons, bolstering readiness and covering other needs, some tied to the Iran war.
Iran and Ukraine spending
A Democratic Congress could challenge some Iran- and Israel-related spending while pushing for more aid to Ukraine.
AI data center concerns
63% of registered voters oppose having a data center within 10 miles of their home, compared with just 13% who support one.
What matters most
Democratic control of Congress may alter federal spending, oversight and regulatory rules for defense, healthcare, crypto and AI sectors.
